Definition of Futures contract:
Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. Here, the buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date.
An agreement traded on an organized exchange to buy or sell assets, especially commodities or shares, at a fixed price but to be delivered and paid for later.
Binding contract made on the trading floor of a futures exchange to buy or sell a commodity, financial instrument, or security, on a stated future date at a specified price. These agreements are standardized in terms of quantity, quality, delivery location, and delivery time for each item, and do not normally result in an actual delivery but are settled (traded out) through counter-contracts. Used in hedging, futures contracts help mitigate the risk of wild price fluctuations. In contrast to an option (right to buy or sell an item that lapses if not exercised) a futures contract is an obligation fulfilled only by the completion of the transaction.
A futures contract is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange. The buyer of a futures contract is taking on the obligation to buy and receive the underlying asset when the futures contract expires. The seller of the futures contract is taking on the obligation to provide and deliver the underlying asset at the expiration date. .
How to use Futures contract in a sentence?
- Futures contracts are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined future price and date.
- The futures contract was an outstanding deal that was made by our investment manager as we were in a good position in the market.
- That commodity company is well known for their agents ability to quickly close futures contract s when trading becomes fast on the trading floor.
- A futures contract would be far more risky as an investment than an outright purchase of stocks or mutual funds.
- Futures are also often used to hedge the price movement of the underlying asset to help prevent losses from unfavorable price change.
- A futures contract allows an investor to speculate on the direction of a security, commodity, or a financial instrument, either long or short, using leverage.
- The existence of futures contracts allows sellers or buyers to hedge against risk.
Meaning of Futures contract & Futures contract Definition